A logo of Panasonic Corp is pictured at its showroom in Tokyo November 1,2012. REUTERS/Yuriko Nakao

Japanese companies are spinning off their chipmaking operations as profit margins shrink, mainly due to stiff competition from South Korea, the paper said.

The move underlines Panasonic President Kazuhiro Tsuga’s determination to weed out weak operations as he focuses on higher-margin products to end years of losses at the consumer electronics conglomerate.

Panasonic has chip production plants in Japan’s Toyama and Niigata prefectures, as well as in China, Indonesia, Malaysia and Singapore, the Nikkei said.

The job cut will likely affect mainly foreign plants, the paper said.

Expenses resulting from the workforce reduction are expected to reach 50 billion yen ($514 million) for the year ending March, the paper said, adding the company expects to soften the impact of this through improved earnings.